The derivatives market= $1.405 quadrillion. So how much is a Quadrillion?

To anyone that finds this topic interesting and has a Facebook account, I recommend joining the group ATCA. DK Matai is a Certified Financial Analyst and a Philanthropist out of Switzerland who throws a lot of philanthropy which good sugar to swallow this with, and yes I'm a critic of reports and he has his facts straight (and he's not trying to sell us stocks).

So how big is the derivatives market? A Quadrillion US dollars does not exist yet (sign of excessive fraud). The total net worth of the Planet Earth is around $100 trillion, or only 1/10th of a quadrillion US Dollars. The net worth of the United States floats between $50-60 trillion dollars. The square root of a Quadrillion is over 32 million. A Quadrillion dollars holds 15 zeros.

How big is $1.405 quadrillion?

This is $206,000 US Dollars per person on the planet. "According to various distinguished sources including the Bank for International Settlements (BIS) in Basel, Switzerland -- the central bankers' bank -- the amount of outstanding derivatives worldwide as of December 2007 crossed USD 1.144 Quadrillion, ie, USD 1,144 Trillion.

The main categories of the USD 1.144 Quadrillion derivatives market were the following:
1. Listed credit derivatives stood at USD 548 trillion;
2. The Over-The-Counter (OTC) derivatives stood in notional or face value at USD 596 trillion and included:
a. Interest Rate Derivatives at about USD 393+ trillion;
b. Credit Default Swaps at about USD 58+ trillion;
c. Foreign Exchange Derivatives at about USD 56+ trillion;
d. Commodity Derivatives at about USD 9 trillion;
e. Equity Linked Derivatives at about USD 8.5 trillion; and
f. Unallocated Derivatives at about USD 71+ trillion.

Quadrillion? That is a number only super computing engineers and astronomers used to use, not economists and bankers! For example, the North star is "just" a couple of quadrillion miles away, ie, a few thousand trillion miles. The new "Roadrunner" supercomputer built by IBM for the US Department of Energy's Los Alamos National Laboratory has achieved a peak performance of 1.026 Peta Flop per second -- becoming the first supercomputer ever to reach this milestone. One Quadrillion Floating Point Operations (Flops) per second is 1 Peta Flop/s, ie, 1,000 Trillion Flops per second.

It is estimated that all the data found on all the websites and stored on computers across the world totals more than One Exa byte of memory, ie, 1,000 Quadrillion bytes of data...

...1. Subprime Mortgage linked Loans & Assets (USD 1.5 trillion) within Mortgage backed Assets (USD 5 trillion);
2. China, India, Eastern Europe and other Emerging Market Loans (USD 5 trillion);
3. Commodities (Commodity Derivatives at about USD 13 trillion);
4. Corporate bonds (USD 18 trillion);
5. Commercial (USD 22 trillion) and Residential property (USD 45 trillion);
6. Credit Cards Outstanding Debt (USD 4.5 trillion);
7. Currencies (Foreign Exchange Derivatives at about USD 62 trillion); and
8. Credit Default Swaps (USD 57 trillion) as a subset of all Derivatives (USD 1,405 Trillion).

The relative scale of the world's financial engine is as follows:
1. The entire GDP of the US is about USD 14 trillion and falling.
2. The entire US money supply is also about USD 14 trillion with rising Quantitative Easing in trillions.
3. The GDP of the entire world is USD 45 trillion and falling. USD 1,405 trillion is 31 times world GDP.
4. The real estate of the entire world is valued at about USD 65 trillion.
5. The world stock and bond markets are valued at about USD 70 trillion.
6. The trans-national universal model financial institutions own about USD 150 trillion in derivatives.
7. The population of the whole planet is 6.8 billion people. So the derivatives market represents about USD 206,000 per person on the planet."

http://www.mi2g.com/cgi/mi2g/frameset.php?pageid=http%3A//www.mi2g.com/cgi/mi2g/press/190309.php


The issue of Quantitative Easing is a heavy question. Bernanke and the current/former Treasury Secretary have been snagging taxpayer dollars in the form of a "bailout" and TARP to add value to the toxic assets without hyperinflation? Are the TARP funds supposed to absorb the inflation? Not sure how that works. Bernanke seems to be pro-inflation. Our Federal Reserve chairman and Treasury Secretary are engaging in some sort of financial contortionism to give value to the fraudulent assets. We've got creditors around the world to pay off!

And we all thought that the banks were just insolvent. It's been 6 months and $3 trillion dollars later (spoken $1.4 trillion spent on bailouts + stimulus + omnibus + earmarks + pork) and the banks have yet to lend. Many jobs have been lost since the initial collapse, many more people foreclosed on their homes since then. This obviously isn't working.

This is Obama on the Toxic Asset plan.




On a personal note:
As a late comer to the financial markets during the dot com economy, post layoffs from our brokerage firms finance professionals were forced to find work. Our options were finance/accounting, the real estate market or the Derivatives market. Working in a firm that invested in derivatives was like working in a prestigious niche that dealt with a market which operated like a sketchy pawn shop. Many savvy, marketable engineering/techie types with masters in their own field and MBA's ended up in this field. On my first day of work, my boss told us right out that these derivatives are "supposed to be backed by bonds". Everything I processed were. We were set up in the perfect work environment, were treated really well as employees. However noone understands the joy of processing a multimillion dollar settlement from any random firm (Countrywide, Morgan Stanely, etc.) in an unregulated market through inconsistant means when the pertinent information is on page 9 and jammed in the fax machine.

I wrote the story to illustrate this point, these bank and non-bank lenders knew they were selling krap. This story happened a few years ago. We knew this was coming, and we knew it was huge. Did we say anything? People were preoccupied in their personal gains during the booming real estate market. Talking like this would make anyone sound crazy unless the audience was already familiar with financial instruments. I'm trying to illustrate why I'm against the bailout.

Here's a Max Keiser video discussing the topic. He gets to the good stuff 6 minute into the vid. At least on blogspot you can just fastforward without waiting for the video to upload. 5 minutes into the video he discusses the role of the Federal Reserve and the status of our debt as is.


also found on http://www.youtube.com/watch?v=SdZMsPWnwMk

The markets were unregulated so finding accounts to hold the banksters accountable for their crimes is going to be a sticky wicket. Disappointingly enough, Congress has forced the taxpayers to be shareholders yet we have not seen one proxy. We have no rights as shareholders. They have not mentioned any sort of prosecution against these criminals. The AIG bonus issue is a red herring.

(I may have another video to upload shortly)

Are Boomers the Most Selfish Generation in History?

Ah, the Beatniks. The NAM protestors. I'm not old enough to have been there so my bias comes from what I see today. But it looked like fun. FUN! But a generation later, these same people are preaching the essense of global warming as boomers enjoy their SUV's with a "save Tahoe" sticker on the bumper and telling everyone else what to eat, smoke or drink in lieu of the upcoming massive use of medicare budget.

Honestly though, I have to credit the Depression Era children for marching for our civil liberties and braving the coldest opposition in order for us to enjoy the rights and priveledges we do today. This is a real over generalization of course. The boomers are infact a large group and not everyone started or ended up in the same place. But I'm addressing the trends and the Boomers are a large enough group to take precidence over everyone else. Our Congress is made up of Boomers.

Someone had mentioned that this is the 1st generation to leave their children in a world worse than they found it.

1. The Boomers make up the majority of those who benefitted from real estate speculation, since real estate was priced fairly (as they had access to stronger real wages in order to save up for that mortgage. Gen Y has no chance in the current conditions. Don't think the public sector is going to enable them to afford legitimate mortgages on the excessively high real estate value).

2. The Boomers have demanded rises in Social Security (of course, hello inflation) however the future costs of Medicare and Social security alone will raise the fiscal burden $41 trillion to $52 trillion. http://www.gao.gov/cghome/d08446cg.pdf -see pages 17 and 18.
To make matters worse, it appears that we are going to be nationalizing the banks, at a cost of $1.4+ trillion in bailout funds approved by our congress and a proposed bailouts for those who gambled in the real estate marekt.

The net worth of America floats between $50-60 trillion dollars. OUR DEBT = OUR NET WORTH (or exceeds it). Hello! AMERICA IS BANKRUPT!!! China buys treasuries to keep the Yuan valued lower than the value of the US Dollar. However, Hillary Clinton is selling even more treasuries to China to finance our spending (the debt we have can be considered a Security issue, China can easily push our currency to collapse). And Geithner thinks that he can just tell China to raise the value of the Yuan. Kids, if we want to fix the detrimental trade deficit, we need to stop spending. Why is the trade deficit bad? The biggest economists, including Krugman believe that the deficit is the fundamental root of our economic crisis. http://www.economist.com/finance/displaystory.cfm?story_id=13251429 We can't have a public sector without a private sector and the private sector is vanishing to far away lands with labor so cheap Americans can't compete because of our cost of living index.

3. With that being said, they will be spending the their as of now non-existant grandchildren's salaries to save their asses NOW! The ironic part is that Boomers were the most open to Marxist ideals during times of protest (another selfish trait in my opinion) when Capitalism runs on greed. Capitalism allowed the Boomers to do so much throughout their lifetime, including the indulgence of credit and a middle class lifestyle for most. And this they refuse to leave to their children, while we, our children or the children that do not exist are left to pick up the tab--without a private sector due to offshoring and outsourcing because more Boomer CEO's and shareholders want to benefit from the cheaper costs (and same or lacking production).

4. Mind you, this crisis couldn't be created by itself. It needed willing participants to buy ARM loans to flip property to keep it unaffordable to the people who earn the average salaries in any town or city. Credit thrives on midlife crisis'. A technique often used in marketing is tricking people into believing they need something. Sure spending helps the economy, as keynesian economists preach. But if you don't have value, you shouldn't have credit.

Here are a few more articles concerning the silent Boomer group:
http://www.debbieschlussel.com/archives/2007/12/baby_boomer_gen.html
another blogspot.
http://theworstgenerationever.blogspot.com/2007/07/why-are-boomers-so-selfish.html
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/09/AR2007010901334.html

So yes, I may be attacking the Boomers "unfairly". As Gen X & Y would be attacked for other items. Remember the Boomers raised Gen Y. Do I have issues personally with my Boomer parents? Absolutely. My parents foolishlly gambled away money in the real estate market in the amount that could've paid off my college education (which I paid for myself. I'm no Paris Hilton wannabe trust fund brat. The media ignores us, so you blame Gen X&Y for being spoilt based on what you want to see). Again, it's their money not mine. But now I don't want to pay for their Medicare and bail them out of their real esatte gambling on my lowered real wage. I (or the collective Gen X&Y) could not afford the real estate (as the free market should dictate, but gouged thanks to the misuse of the credit market), socializing our lifestyle with community property (or lack of ownership due to affordability issues) through means of ARM loans and public sector jobs while those who 'already have' privitize the gains. This is the reality. Gen Y is in the workforce. Gen Y is starting families. Gen Y should be building the support in real estate prices if the real wages, courtesy of the private sectors enables us to. The boomers are not retiring soon enough. But they're concerned with short term gains, although long term gains would benefit them if they wanted to increase their social security benefits.

We know that the system wasn't perfect, but the Boomers enjoyed more good times than bad. And the Boomers have the largest collective voting and purchasing power which makes the trends in the group influential. This group has more influence, than the current Gen Y in numbers and in financial matters. Its' a shame that most of those protesting the bad fiscal management of our politicians are infact Gen X and Gen Y. I will soon be adding to the numbers in protest.

My parents ignore the real wage troubles relative to the higher cost of living, like our collective society they suffer from the entitled, narcissistic trait of 'I have mine'isms. Shared between the left and the right. However, they look no further than themselves when discussing matters outside their realm. And again, it was the boomers who bought into more socialist ideals because we're not nice enough (preached by liberals who are a part of the worlds most selfish generation).

They approve of a credit bubble regardless of its' effects on the world economy (silence is consent). My parents need the media to tell them how to think, be it MSNBC or Fox News; both which are flawed due to political bias (serving political agendas, not ours). Again, it would be unfair to generalize an entire group based on the behavior of my parents. However, these things are a part of larger trends, the trends are in contrast to some freedoms that the hippies preached or preached against years ago. The result of trends as of now will make it difficult for Gen Y or later to make ends meet. Which is rediculous, our country has so much wealth. It requires pathetic fiscal mismanagement to result our country in the situation it is in today.

Fiat Currencies-America in 2009 too similar to Weimar Republic

The talk is that the US is heading for inflation or hyper inflation due to the massive printing to pay for the US debts. The Weimar Republic is noted in history as the time when post WWI Germany, in financial ruin printed so much money that people were hauling wheelbarrows of money to buy a loaf of bread.

This is a comprehensive piece on the situation.
http://mars.wnec.edu/~grempel/courses/germany/lectures/23weimar_collapse.html

I'm loosely pulling together comparisons to show similarities are probably a general additude in human behavior reflected in politics during a time of crisis and need.

THE BACKGROUND
Germany lost and owed debts and reparations after WWI. Germany depended heavily on American loans as the Great Depression hit. The US today is borrowing excessively from China and other foreign creditors as we spend quite a bit of money due to the War in Iraq and Afghanistan and who knows what else. The Wyanmar Republic did not have the strong economy that the US has enjoyed, but they also didn't suffer issues such as massive trade deficits and credit crisis' as well.


During times of economic hardship, as a trend the votes swing to the left.
The Election of 1928 in Germany resulted in just that. The Social Democrats were only six seats shy of an absolute majority. This is again quite comparable to the democratic majority on Capitol Hill as of now. The Democrats in America hold the majority in the Senate and the Congress, along with a liberal POTUS. At this time, the NAZI's were seen as a minor radical group.

In 1930, the Nazis increased their number of Parlimentary seats from 12 to 107 due to the proportional representation provision. The right and left extremists had a larger combined proportion than the Social Democrat.

Again, I see this trend occuring in the US. Due to human nature. Americans tend to be centrists in their views, but when faced with hardships people turn further away from the center believing that it's a failed strategy.

Today, people are calling out for more socialism in our governmnet and communism has been praised.

Again, the Parliament (like the US today) added several taxes, yet programs had to be cut. Obama just spent over $3 trillion on stimulus and bailouts alone. America is already bankrupt. Which is beyond a disaster knowing how rich America really is. No other country has been able to create and build wealth and improve the quality of life at the rate America's freedoms and capitalism has allowed us to in the last 200 years.

The demand for gold has gone up in the last 10 years. The spikes in price/demand for gold mimic the spikes during the Savings and Loan Crisis. ETFs are manipulated and oh, mutual funds and mainstream brokerages such as Charles Shwab are now selling ETF's. However, the Fed does manipulate the price of gold, and there is probably not enough gold to represent the net worth in America. Other precious metals are enjoying a high demand, such as Platinum and Palladium (those seem to resist volatility in market fluctuations). Silver is a metal, yet it doesn't rise the way gold does. But may be more accessible for those who don't yet have $900 to invest in an ounce.

The fiat currency is in question. On April 2nd, the US will attend a G-20 meeting in London. The Chinese have already requested a global currency as a mixed bag of international currencies to hold as a reserve currency.

ON CHINA AND THEIR GLOBAL CURRENCY REQUEST:
Okay, this is a personal note from myself. China is an inexperienced player in the global markets. China only thrives because of the trade surplus they received from America (as they impose protectionist barriers against the US in trade), which is enforced by the WTO. China did not create or innovate their own wealth. China has not had the long standing political structure that allows their people to do exactly that. As a result, THe only way they can compete in the global market is not through products of competative quality but through currency manipulation. The only benefit of China is their population of a billion, which is seen as an opportunity through the world if their leaders allow imports. bfd. India too has a population of a billion people, they're bright people who enjoy a low cost of living and have not caused deficits in other countries. Why is China entitled to make demands... if India is able to handle the fluctuations on it's own? There is no perfect country. But I'd rather do business with Indians than with the Chinese under their radical governments.

So exactly why do the Chinese get the soapbox to make such demands? The bill for a global currency (as a reserve) has already been introduced to Congress. I trust Congress less than I trust our enemies.

Our politicians are just incompetant sellouts who should be banned altogether from enacting any fiscal (esp. spending) legislation, regulations in the markets, federal reserve policy, proposals made by the treasury secretary, trade policies or strategic moves to our economy. These measures would probably be better off if voted on directly by the American citizens, we understand it better than they do. My late dog understands this better than they do. And it's only because we care, they don't.

the dangers of idealism, ideologies -- explained by a laissez faire capitalist

Before I get into the depressing topic, I would like to mention the reason why I defend my free market capitalist stance. It works like gravity, you can fly or ride a bike when you work with it. If you attempt to defy gravity, you will fall. As in other systems, government control is being called out. But these systems of bigger government ignore the fallacy of human nature, and the nature of narcissism and sociopaths.

Which brings us to the reason why free market capitalism works and the most important rhetorical question.

Who do you trust most with your money and affairs?

Do you trust the government?
How about a special interest whoring politician?
How about a Bush? Any Bush, Neil Bush (indicted for crimes in the S&L Scandal). Or Bush Sr (the president at the end of the S&L Scandal). Or what about Dubya, the manipulator of the great sequel of the S&L Scandal?

A NAFTA signing Bill Clinton?
How about derelgulating Phil Gramm?
Would you trust bailout bank pimps such as Paulson or Geithner?
How about a Jr. Senator from Illinois with no prior fiscal management or business experience?
Do any of these people have your own or their own best interest at heart?

Or would you trust yourself to be the most responsible with your own affairs?

Again, this all retorts back to the essense of human nature (and when I say "human" I mean faulted), and how do to work efficiently around with it.

Ideologies are irrelevant because absolutes are almost impossible.

These questions come up in light of the recent economic turmoil and the possibility of nationalizing our banks/financial sector/country in general. And I'm motivated to say these things in light of the misinformation broadcasted throughout the mainstream about the issue.

The likes of Naomi Klein seem to be or promote ignorance on the topic. She seems to be reactive (vs. projecting) in her protest so I can give her the benefit of a doubt that she has good intentions. However the details are that important and I hope somehow that people will or already are familiar with it.

Many accuse Ameirca's capitalism to be a violent one. Note, every war in history has it's roots in economics. When nothing makes sense, always follow the money. The main combats throughout the world have been fought between systems built on ideologies or governments with roots in a specific type of bartering system.
Societies throughout history have always fought eachother over something of value, be it land or even taxation (or oppression by the government resulting in poverty and starvation). I beg to argue that the violence in America is a result of a problem, not the system and the violence by America at times were committed in either defense of a different government (ie. communism- see Vietnam or Korean Wars) or for imperialistic purposes.

I personally find it baffling that communists and socialist sympathizers might call themselves "compassionates" or "liberals" would denounce capitalism when Communism and extreme forms of socialism (facism) have led to democides that outnumber the casualties in any war fought in American history. Communist Manifesto does mention force as a necessary means of control. Mao is one fine example. He was a poverty pimp, yet he pulled a nice bait and switch and murdered 35 million of his own people. I want to pull up two sources to cite my proof.

1. http://www.bigeye.com/062697.htm
GOVERNMENTS KILL MORE PEOPLE THAN WARS by Eric Margolis

"Mass-murderer Pol Pot was run to ground this week in the remote jungle of northern Cambodia. Leader of the notorious Khmer Rouge, Pot ordered the killing of at least one million `class enemies' in Cambodia's Killing Fields.
Pot is a monster, and deserves to be buried alive, like many of his victims. This marxist madman reminds us of an amazing, but little-know fact: more people have been killed in the 20th Century by their own governments than by all wars combined.

About 25 million soldiers died in World Wars I and II. Another 12 million were killed in this century's other wars and revolutions, a total of 37 million dead.


Under Lenin and Stalin, the Soviet government became the greatest mass-murderer in history. Lenin's collectivization and purges of 1921-1922 caused 4 million deaths. In 1932, Stalin ordered Ukraine starved to enforce collectivization and crush Ukrainian nationalism. At least 8 million Ukrainians were murdered. Others resorted to cannibalism.
From 1917 to Stalin's death in 1953, the Soviet Union, worshipped by leftists around the world as the acme of human political accomplishment, shot, tortured, beat, froze or starved to death at least 40 million of its people. Some Russian historians claim the true figure is even higher. In an ugly spasm of deja-vu, Russian troops slaughtered 80,000 Chechen civilians over the past two years.


In China. Great Helmsman Mao Zedong had 2 million `class enemies' shot when the communists took power. Another million Tibetans and Turkestani Muslims were `liquidated.' from 1950-1975. During Mao's crazy Great Leap Forward, in which China's farmers were collectivized en masse, an estimated 30 million or more people starved to death. Another two million are said to have been died in Mao's Cultural Revolution. Total: 35 million dead.

Hitler was responsible for the deaths of 12 million civilians, half of them Jews. The Nazis exterminated people because of race; the communists because of class or nationality. Hitler killed with gas; Stalin with bullets, cold, and hunger.
Some two million German civilians were killed in 1945, and at least 200,000 died in communist concentration camps from 1945-1953. The victories Allies handed back 2 million anti-communist Soviet citizens to Stalin in 1945: he had half shot, and the rest sent to Arctic death camps.


During World War I, the Ottoman Empire slaughtered or starved up to 2 million Armenians, the first great genocide of the new century.

In the early 1960's, 600,000 ethnic Chinese were massacred in Indonesia by government-encouraged mobs and soldiers.

During the Marcos era in the Philippines, 75,000 Muslims were massacred by government paramilitary gangs.

In 1971, Pakistani troops killed tens of thousands of Bengalis in former East Pakistan. Indian security forces and police have massacred great numbers of tribesmen in border regions, and many civilians in Kashmir and Punjab.

In the 1980's, Ethiopia's marxist regime denied seeds to `capitalist' farmers, causing a million people to starve to death.

A half-century of tribal massacres between Hutu and Tutsi culminated in the recent slaughter of half a million Tutsi civilians by Rwanda's Hutu government.

Serbia's nazi-nationalist regime conducted the massacre of 200,000 Muslim civilians in Bosnia.

There are many other examples. But just the figures cited above amount to almost 100 million deaths this century - deaths that were not caused by war or revolution, but by the conscious decision of tyrants, politicians, or bureaucrats to murder great numbers of their own people for reasons of ideology, religion, race or land.
Compare: 100 million people murdered by governments this century; 75% by communist regimes - to about 38 million killed in all wars and conflicts.

So let Cambodia's by now almost forgotten Pol Pot remind us that big governments, particularly those driven by ideology and idealism, have been a greater menace than big armies, heavy armaments, - even nuclear weapons.

In fact, Pol Pot's Khmer Rouge killed five times more civilians than did atomic bombs at Hiroshima and Nagasaki."

2. China's Bloody Century By R.J. Rummel
http://www.hawaii.edu/powerkills/NOTE2.HTM
"1. Introduction and Overview [China's Bloody Century]

I. TRANSFORMATION AND THE NATIONALIST STRUGGLE, 1900 TO SEPTEMBER 1949
2. 105,000 Victims: Dynastic and Republican China
3. 632,000 Victims: Warlord China
4. 2,724,000 Victims: The Nationalist Period
5. 10,216,000 Victims: The Sino-Japanese War
6. 3,949,000 Victims: Japanese Mass Murder in China
7. 4,968,000 Victims: The Civil War
II. THE PEOPLE'S REPUBLIC OF CHINA
8. The People's Republic of China: Overview
9. 8,427,000 Victims: The Totalization Period
10.7,474,000 Victims: Collectivization and "The Great Leap Forward"
11. 10,729,000 Victims: The Great Famine and Retrenchment Period
12. 7,731,000 Victims: The "Cultural Revolution"
13. 874,000 Victims: Liberalization..."


Today, we have another issue regarding gun control and the second amendment. I can vouch and say that most homicides in America are committed with knives. The Census Bureau has the 411 on that.

The second amendment states that "A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed." This can be interpreted in many ways, but the point is that the people have a right to defend ourselves.

an elaboration would move to the fourth amendment, "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized."

Guns anymore seem to be symbolic of self defense. Today's society is becoming centered on intellegence and technology. Nobody is bombarding your home with guns for robberies. Well there are a few, and in self defense I understand why people would prefer to own a gun. I do not, but everyone I know does lock their doors when they're at home and often have a security alarms placed in their home, their businesses or on their car.

As represented by the recent economic crisis, including the Bernie Madoff scandal theft is occuring through more sophisticated matters. The mafia isn't showing up at anyone's home with guns. They're robbing people in a white collar fashion with sophisticated heists with the help of our legislators. Legislations have been enacted (then removed, thanks Gramm!) as a defense. Even with laywers, it's costly and often inefficient. Gun sales have recently gone through the roof on the eve of Obama's inauguration. Unfortunately, guns may not be the adequate measure of protection.

Which brings the topic to the next mystery. How can this subprime crisis be contained? Right now Geithner and Congress seem to add fuel to the fire by tossing money at CEO's. They're the fox guarding the henhouse. The shareholders should be the defendants, as they have direct influence over the affairs of the banks. Unfortunately, the taxpayers are forced to own stake in these companies without ever seeing a proxy. We will never get to vote out a CEO or take these banks to court like shareholders do (remember Enron?). Our "representatives" want our money without a say in how the matter is resolved. The people might have to take this on, again it's always the people (not the politicians) who do great things for our country.

The Bailouts, Criminal banks, our Legislators and the Constitution

I hate law. I hate politics. I am an expert at neither and I personally hate them both more than the average American hates dealing with the CHORE that is this subprime lending mess. Yet again, it's a necessary evil. Since the American people are unconstitutionally dragged into this mess.

Dear Readers, may I introduce you to the tactic and rhetoric and fallacy that is called Fear, Uncertainty and Doubt. Or FUD for short. This is an older phenomenon. Bill Gates and Microsoft used this tactic to intimidate their competators Linux and IBM. Since the rise of the tech industry I've seen this tactic used along with ad hominems and red herrings to intimidate their antagonist. It can be called a lot of other things, jargon changes with it's intentions.

THe bailout initially violated the Constitution because spending bills must be passed in the House first and the Senate second before it heads to the President’s desk in the Oval Office. The bailout passed President Bush on behalf of Paulson before it was voted on by Congress and the Senate.

The night the bailout was proposed, our government declared Martial Law while the Constitution was being violated. They used scare tactics like declaring that the economy was going to collapse at that very minute, or that this was so complicated that Congress must resign all control of the bailout to the Treasury Secretary. This is a FEAR tactic. They depend on our ignorance to pull this off. Resourceful, accurate information on the scenario as is in an objective manner is not presented to the general public, or made easily accessible as a reference. That would solve our own purposes, not Paulson's.

One could have the media tell us that the universe supports these bailouts, I can go anywhere; such as a store or a gas station or anywhere people spend their money and people are complaining about this, openly. In public. Everywhere. I've heard clerks ask if this is really happening. In a logical sense, it shouldn't be.

Someone can tell me that the sky is red when my own eyes tells me that it's blue. There could be two reasons for this.
1. They confuse blue for red.
2. They are convincing me not to trust my sense. That i don't know what I'm talking about. That my eyes are fooling me.

This is uncertainty and doubt that will plague the financial crisis and any other unethical or manipulative schemes. I ran into this when realtors were defending the unjustly high price of real estate. The real wages didn't support it. Most of these properties were owned by specualtors. But they were telling me that "demand was high"... that "San Diego was a desirable location".

Okay. I'm a multigenerational decendant of San Diego and I personally know what homes sold for in the last 50 years in San Diego. Because my family has bought and sold homes in San Diego for 4 generations. The job market in San Diego was always muffled, as were the salaries. Therefore, in the last century the homes in San Diego were always valued at just above par (or average). The Cost of Living Index might have been 135, not 220. So I knew right away that the realtors were full of @#$!. Mind you, not one realtor or specualtor gave me any credible evidence as to why the real estate in San Diego was infact that expensive. Realtors were using ARM loans to speculate, artificially making the price of real estate unrealistically expensive. Natives of San Diego were infact looking at the home prices with their jaws to their knees, blaming transplants or the tech sector in the Bay Area for the "demand" (false, artificial demand) that got the price so high to begin with. Many of them were just concerned about their ability to afford a home in their hometown. The realtors were backed by the media pimping out the prices.

So that was a fine example of how Uncertainty and Doubt plays into a scenario. To sum it up, it's just exaggerated bull$@%! with absolutely no proven fact to support their claim. Infact, the facts proved otherwise. The average household salaries in that city in 2000-2005 were around $50,000 per year. This is not enough to qualify for a legitimate mortgage on a home that is valued at $750,000 (or whatever the average price of a house was at that time). Yet the Pied Piper, aka. the media played the tune of how great the housing market is (to justify the prices).

All this can be retorted to "hear say", aka Uncertainty and Doubt (of FUD). Or just straight out lies.


Now back to the bailouts.

When considering the bailouts, Not once did Congress even breathe the words "auditor" or seek their own council to interpret the situation to them before passing the bailout.

Not once did anyone bother to examine the possibility of suspending the mark to market rule; or any other means to make the banks solvent to keep businesses running (and people employed).

When 95% of Americans oppose this bill, signing it into law is infact Taxation Without Representation.

Note: The president swears to defend the Constitution upon taking his oath.

"I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States."
—Presidential oath of office, Article II, Section 1, United States Constitution
http://inaugural.senate.gov/history/daysevents/potusswearingin01.cfm

So whose responsibility is it to protect and defend the Constitution? The POTUS of course. Obama taught Constitutional Law, he hates that thing and the Machievellian Prince knows better than most how to get around it. So are the lawyers supposed to protect us? Only if we hire them. So in the end, it's up to us to learn the Constitution and to do our sole duty to interpret, protect and defend it. We need to be familiar with it. Stand for something you'll fall for anything.

In reality, shareholders should be the only outsiders dealing with the bank during trial. The taxpayers and our money should not be involved with this, most Americans did not participate or understand the crime even. Without being melodramatic (I'm trying to prove a point here), this legislation is an unwarrented seizure or bond set on the taxpayers for the crimes of the banks. This is not just a moral hazard.

Think about it this way, one assumes control of the situation once they take responsibility for it. Sure it's not your fault if you're attacked and mugged, but it's your responsibility to defend yourself if you can or you suffer the consequenses.

Taxpayers are supposed to be watching this entire ordeal go down on the sidelines; without our Constituion, our liberties, our rights and our money seized from us. The 2nd Amendment, the right to bear arms protects us from that. Remove the 2nd Amendment and we have no case against unwarranted searches and seizures. The 2nd Amendment does not end with guns. (guns and gun control are symbolic of this gesture, and gun sales have been going through the roof)

This Congress may want to re-consider grand theft and larsony of the American taxpayers without the immediate scare of pine-tar torches and clatter of pitchforks; and tempermental women sitting patiently with heads on a stake right outside the gates...silence is consent.

A MUST READ: "The Big Takeover" by the Rolling Stones

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Geithner throws another trillion dollars at the banks.

Well according to Geithner. Okay so the first billion TARP allocated fund didn't make the banks solvent. So they're demanding more money. Meanwhile, AIG blew $400,000 taxpayer dollars on a lavish party for themselves, lost $61 billion last quarter and oh... acted like jerks after Chris Dodd intentionally wrote loopholes in the bailouts allowing AIG to get these hefty bonuses for losing money. So the banks are demanding more money. Who's in control here? The government or the banks? Here's the logic. When a CEO bankrupts a company, either the shareholders or the Board of Directors have enough influence to change management, or have an executive removed. This is what business students are taught on the first day of Finance 101. This is also tested on other business/finance affiliated exams, such as the Series 7. There's a rumour going around that many politicians are vested with AIG. Or that AIG made some of the biggest contributions to our politicians. Maybe they're not in bed together, but they're sucking AIG's toes. But what the government is doing is preventing the natural course of events with these banks. AIG isn't even a bank, they're an insurance company with bank like duties (thanks deregulation!). Instead of allowing the shareholders and BOD to pursue these banks, the government is using our taxdollars to buy toxic assets from these banks, some like myself are kicking and screaming the entire way through. This should cost 300 million taxpayers around $5000. If my math is correct. I have better things to do with $5000 that I don't have in my back pocket. Sorry Bernanke. These toxic assets will not provide 100% returns. Just trust me on this one, I'll explain why. (for speed readers, go directly to the bottom of the screen) TOXIC ASSETS ARE UNSECURED DERIVATIVES These toxic assets are derivatives that are again not secured by a bond like they should be. If anyone is even reading this and they don't understand the concept of being "secured", a mortgage loan is secured with a house. An autoloan is secured with that vehicle. A stock is secured with ownership of a company. A future's contract (a type of derivative) is secured with ownership of a particular commodity. Or an option's contract (another type of derivative) is secured by 100 shares of stocks in either a long or short position. Derivatives are financial instruments that are secured by other financial instruments. The toxic assets in question are Credit Defaults. Credit Defaults supposed to be secured by bonds. CREDIT DEFAULT DERIVATIVES WERE SOLD TO FINANCE ARM LOAN INVENTORY When people are not able to pay off their ARM loans, the institutions would default on the agreed Credit default payments to the investor (often Hedge Funds). When the credit defaults were not secured by bonds, the derivatives were illiquid. They were merely an arbitrary agreement of money transfer between two parties making a risky gamble that the ARM borrower would pay their mortgages. When the borrower defaulted on their payments (due to increase in interest rates/payments, financial hardship, job loss), the lender had no payments to make to the hedge fund borrower. Because these things were not backed by bonds, they had nothing to give to the hedge fund traders. Hedge fund traders dumped these CD's. This is why the banks are illiquid. With that being said, a few questions come to mind that the Board of Directors or the shareholders should be asking the CEO's (but can't because the government interferred). 1. Who did the economic forecasting? What methods/models did they use? (btw, the Case Schilling Indes proved to be a JOKE!) 2. What business model was used to establish inventory? in other words, why is there too much inventory? What information were these decisions made from? 3. Who allowed the toxic assets to be sold in the first place? Sorry, if the share holders don't want these things, why are taxpayers forced to secure them? (see TARP) THE SEC IS NOT RESPONSIBLE FOR REGULATING DERIVATIVES. Most established derivatives are regulated by the Securities and Exchange Commission. Credit Defaults are not. Somehow the SEC got out of it after deregulation; when non-banks became mortgage lenders. Lastly, the quantity of derivatives traded were in the quadrillions. THE ENTIRE PLANET EARTH IS NOT YET VALUED AT A QUADRILLION DOLLARS!!! There was a lot of fraudulent derivatives sold world wide. It's going to cost a lot of money to secure these toxic assets. Who are they kidding?